Remuneration and the political response

FINMA Circular 2010/1 on remuneration schemes

The remuneration conditions attached to the rescue were extended to the whole financial sector through a FINMA circular. After a public consultation in the summer of 2009, FINMA published Circular 2010/1 “Remuneration schemes” on 10 November 2009, with effect from 1 January 2010. The circular established minimum standards for the design, implementation and disclosure of remuneration systems. It applied in principle to all banks, securities dealers, insurers and holders of licences under the collective investment schemes legislation, but was mandatory only for the largest institutions, namely those required to hold capital or a solvency margin of at least CHF 2 billion. At the time this covered seven banks and five insurers, while the other institutions were to treat the principles as guidelines.¹

The content of the circular followed the principles that the Financial Stability Board had adopted internationally in 2009. Variable remuneration had to reflect the sustainable economic success of the institution, taking into account the cost of capital and the risks incurred. It was not to create incentives for excessive risk-taking. Persons in senior positions and those with significant responsibility for risk had to receive a substantial part of their variable pay in deferred form, dependent on future performance. The circular also supported mechanisms for reducing or reclaiming deferred awards. FINMA replaced the concept of economic profit in the consultation draft with the broader notion of economic success. It also rejected caps on salaries.² The design reflected the Swiss regulatory tradition of principles-based supervision. It aimed at aligning remuneration with risk and left the level of pay to the institutions and their shareholders. Whether this approach had achieved its aim was questioned again after the collapse of Credit Suisse. The reforms discussed in chapter G.VI include proposals on the deferral and recovery of variable pay at systemically important banks.³

The initiative “against rip-off salaries”

The political reaction went further. The popular initiative “against rip-off salaries” (gegen die Abzockerei) had been launched by Thomas Minder, a businessman from Schaffhausen, before the crisis, and was submitted in 2008. It proposed to give the shareholders of listed companies a binding vote on the pay of the board and the executive management, to prohibit severance payments, advance payments and certain bonuses for acquisitions, and to require pension funds to vote in the interest of their members. The Federal Council and Parliament opposed it and prepared an indirect counter-proposal in the form of a revision of company law.⁴

The rescue of UBS, and the bonuses that the bank continued to pay after it, gave the initiative a force that it would hardly have had otherwise. On 3 March 2013 the people and the cantons accepted it with 67.96 per cent of the votes and the approval of all cantons, at a turnout of 46.74 per cent.⁵ The approval was among the highest ever recorded for a popular initiative and cut across the usual divisions between town and country and between the linguistic regions. The Federal Councillor responsible, Simonetta Sommaruga, said that the Swiss people had expressed their discontent.⁶ The new Article 95 paragraph 3 of the Federal Constitution was implemented first by an ordinance of the Federal Council against excessive remuneration in listed companies, which entered into force on 1 January 2014.⁷ Its rules were later incorporated into the Code of Obligations by the revision of company law that took effect on 1 January 2023.⁸

The Minder initiative applied to all listed companies. Its most prominent target at the time of the vote was the planned severance arrangement of the departing chairman of Novartis.⁹ Its success is nevertheless inseparable from the UBS rescue. The vote expressed a feeling that the managers of large companies, and above all of the big banks, had privatised gains and socialised losses. That feeling has remained a constant of Swiss politics. It reappeared with full force in the debates of 2023 and 2024 about the bonuses paid at Credit Suisse.

Notes

1. FINMA, press release “FINMA veröffentlicht Rundschreiben zu Vergütungssystemen”, 10 November 2009, https://www.finma.ch/de/news/2009/11/mm-rs-verguetungssysteme-20091111/. ↩
2. FINMA, press release of 10 November 2009 (as above). ↩
3. Federal Department of Finance, “Federal Council report on banking stability”, 10 April 2024, https://www.efd.admin.ch/en/report-tbtf, listing among the proposed measures “rules on bonuses (such as retention periods and clawbacks)”. See also chapter G.VI. ↩
4. Année politique Suisse, “Abzocker-Initiative (BRG 08.080)”, https://anneepolitique.swiss/prozesse/14148 (now served at https://politchronik.swiss/de/prozesse/14148). The entry records the submission of the initiative in February 2008 with about 114,000 valid signatures, the Federal Council’s recommendation to reject it and the indirect counter-proposal in the form of a revision of company law. ↩
5. Swissvotes, “Volksinitiative ‘gegen die Abzockerei’”, vote no. 568, 3 March 2013, https://swissvotes.ch/vote/568.00. ↩
6. swissinfo.ch, “Grosserfolg für die Abzocker-Initiative”, 3 March 2013, https://www.swissinfo.ch/ger/politik/grosserfolg-fuer-die-abzocker-initiative/35126464. ↩
7. Swiss Federal Council, press release “Umsetzung der Abzocker-Initiative: Verordnung tritt am 1. Januar 2014 in Kraft”, 20 November 2013, https://www.admin.ch/de/nsb?id=51029. ↩
8. The revision of the law on companies limited by shares of 19 June 2020 transferred the rules of the ordinance into Articles 732 ff. of the Code of Obligations with effect from 1 January 2023. Under Article 732 paragraph 1 CO, “[d]ie Bestimmungen dieses Abschnitts gelten für Gesellschaften, deren Aktien an einer Börse kotiert sind”, https://www.droit-bilingue.ch/de-en/2/22/220-732-1059.html. On the Federal Act of 19 June 2020 (Company Law), in force since 1 January 2023 (AS 2020 4005), see the amendment notes at https://www.droit-bilingue.ch/de-en/2/22/220-624-841.html. ↩
9. Wikipedia, “Daniel Vasella”, https://de.wikipedia.org/wiki/Daniel_Vasella: the agreement, under which Vasella was to receive up to 72 million francs over six years for a non-compete undertaking, became public in mid-February 2013, two weeks before the vote. After strong public pressure Vasella renounced the payment a few days later. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.